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The Scottish public sector will not receive additional funding to cover a shortfall in regard to an increase in UK Government tax, according to Deputy First Minister Kate Forbes. Forbes has stated that cuts will have to be made if the Treasury does not provide further funds to offset the increase in national insurance contributions. According to the Scottish government, an additional £200m is required to cover necessary expenditure on public sector staff. Forbes emphasizes the need to balance budgets and says that public sector bodies will be under the same level of scrutiny as private sector companies to ensure their tax liabilities are covered.
Holyrood ministers have been informed of expected government compensation of around £300m, however Scottish government projections using the Barnett formula suggest that over £550m will be required to pay the additional costs to public sector workers, rising to around £750m when indirect employees are included.
The increase in employer National Insurance contributions is set to rise to 15% from the current 13.8% in April, while the point at which contributions must be made will be lowered from £9,100 to £5,000. The public sector has a workforce consisting of approximately 22% of total employment within Scotland, compared to the UK-wide 17%. Furthermore, public sector workers within Scotland generally have higher salaries than those in the private sector.
Recently, the British Medical Association Scotland publicly stated that the NHS will require immediate reforms in order to operate successfully for the upcoming year, while Scotland’s public finance watchdog warned councils of significant financial risks and uncertainties for the future. The Holyrood finance committee expressed doubts over the Scottish government’s extended delays in publishing key strategic financial documents. SNP MSP and committee convener Kenneth Gibson expressed concern that the Scottish Government was lacking in essential medium and longer-term financial planning.
Forbes called for clarity from the UK government in regard to their spending plans in the future. The Treasury claims that Scotland already receives over 20% additional funding per person than equivalent UK government spending. Furthermore, they stated that it is the responsibility of the Scottish government to allocate their finances across their public sector appropriately and meet the needs of people in Scotland. In addition, the Scottish government is due to receive extra Barnett funding on top of a record £47.7bn settlement in support of changes to employer National Insurance
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